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Should You Report Multiple Business Ventures on One Schedule C

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  • 02-19-2015, 12:43 PM
    Who Knows?
    Should You Report Multiple Business Ventures on One Schedule C
    I have self-employment income from teaching and writing (similar pursuits).
    I recently took in an exchange student to receive income from the subsidy I am provided for her housing.
    I am tracking related (deductible) expenses in caring for her - mileage, portion of food and utilities.
    The two businesses (and I may add a third with an Etsy store) are so different.

    Do I lump all income and expenses onto Schedule C? (I worry the IRS won't have a clue as to what I am doing)
    What do I say is my principal business? The one with the highest income (the housing subsidy) or the one I've been doing the longest (teaching)?

    Thank you in advance.
  • 02-19-2015, 01:54 PM
    llworking
    Re: Do I Report Multiple Business Ventures on Schedule C
    Quote:

    Quoting Who Knows?
    View Post
    I have self-employment income from teaching and writing (similar pursuits).
    I recently took in an exchange student to receive income from the subsidy I am provided for her housing.
    I am tracking related (deductible) expenses in caring for her - mileage, portion of food and utilities.
    The two businesses (and I may add a third with an Etsy store) are so different.

    Do I lump all income and expenses onto Schedule C? (I worry the IRS won't have a clue as to what I am doing)
    What do I say is my principal business? The one with the highest income (the housing subsidy) or the one I've been doing the longest (teaching)?

    Thank you in advance.

    The income that you receive from housing the exchange student would be better placed on Schedule E, in my opinion.
  • 02-19-2015, 03:38 PM
    badzombie
    Re: Do I Report Multiple Business Ventures on Schedule C
    Unless it's a rental activity, supported by the payment of actual rent, then the exchange student income is probably line 21 income ("other"). For actual businesses, each business you have should have its own schedule c. Teaching and writing are different activities, though if you report all the income and the legitimate expenses on one schedule c the IRS probably wouldn't kick. That's not how the publications say to do it, though. It is better to group activities the right way so they can follow what you did if they were to audit you.
  • 02-19-2015, 03:57 PM
    llworking
    Re: Do I Report Multiple Business Ventures on Schedule C
    Quote:

    Quoting badzombie
    View Post
    Unless it's a rental activity, supported by the payment of actual rent, then the exchange student income is probably line 21 income ("other"). For actual businesses, each business you have should have its own schedule c. Teaching and writing are different activities, though if you report all the income and the legitimate expenses on one schedule c the IRS probably wouldn't kick. That's not how the publications say to do it, though. It is better to group activities the right way so they can follow what you did if they were to audit you.

    Its clearly room and board...which makes it a rental activity in my opinion.

    However, in reading a few memoranda on the subject it appears that many have taken the position that its line 21, other income, and that the expenses are deductible on Schedule A as charitable contributions.

    This particular memoranda:

    http://www.csiet.org/members-only/do...lyPayments.pdf

    Seems to indicate that there are multiple methods of handling the income and expense, that could all be valid.
  • 02-19-2015, 03:59 PM
    adjusterjack
    Re: Do I Report Multiple Business Ventures on Schedule C
    Quote:

    Quoting llworking
    View Post
    The income that you receive from housing the exchange student would be better placed on Schedule E, in my opinion.

    Agree. It's just like renting a room to a stranger. Schedule E makes it more efficient to list expenses and deductions.
  • 02-19-2015, 04:01 PM
    llworking
    Re: Do I Report Multiple Business Ventures on Schedule C
    Quote:

    Quoting adjusterjack
    View Post
    Agree. It's just like renting a room to a stranger. Schedule E makes it more efficient to list expenses and deductions.

    I agree...its just that much more efficient.
  • 02-19-2015, 04:09 PM
    adjusterjack
    Re: Do I Report Multiple Business Ventures on Schedule C
    Quote:

    Quoting llworking
    View Post
    Its clearly room and board...which makes it a rental activity in my opinion.

    However, in reading a few memoranda on the subject it appears that many have taken the position that its line 21, other income, and that the expenses are deductible on Schedule A as charitable contributions.

    The disadvantage of using line 21 and Schedule A is that you lose the standard deduction. Using Schedule E allows the standard deduction in addition to any deductions on Schedule E.

    My vote: Schedule E.

    - - - Updated - - -

    Quote:

    Quoting badzombie
    View Post
    For actual businesses, each business you have should have its own schedule c. Teaching and writing are different activities, though if you report all the income and the legitimate expenses on one schedule c the IRS probably wouldn't kick. That's not how the publications say to do it, though. It is better to group activities the right way so they can follow what you did if they were to audit you.

    A case could be made that teaching and writing overlap with regard to expenses. For example, it would likely be difficult to separate office expenses between the two if you are using the same office equipment for both and buying consumables like paper, toner, and other supplies. And that's only one example.

    I think I would file a single Schedule C for the teaching and writing and list the business as teaching and just consider the writing as incidental.

    Keep careful records, of course.

    I'm guessing that the tax guy will weigh in on this.
  • 02-21-2015, 06:08 PM
    badzombie
    Re: Do I Report Multiple Business Ventures on Schedule C
    In what way is the business of teaching the same business activity as writing? The IRS clearly instructs that any activity you engage in attempting to make a profit is a business, and it also instructs that you must file a separate schedule c for each business you operate. If I teach as an independent contractor, and then I also write a novel, how is that the same activity? Without knowing how much income the writing generates I would not call it incidental. It could be bringing in a lot of money for all any of us know.
  • 02-21-2015, 08:38 PM
    adjusterjack
    Re: Do I Report Multiple Business Ventures on Schedule C
    Quote:

    Quoting badzombie
    View Post
    In what way is the business of teaching the same business activity as writing?

    If you are addressing me, please note that I didn't write that teaching and writing are the same business activity.

    I wrote:

    "A case could be made that teaching and writing overlap with regard to expenses."

    Quote:

    Quoting badzombie
    View Post
    The IRS clearly instructs that any activity you engage in attempting to make a profit is a business, and it also instructs that you must file a separate schedule c for each business you operate.

    So if I own a Circle K with gas pumps am I operating a grocery store and a gas station and would I have to file two separate Schedule Cs? I don't think so.

    It's one thing if you have created multiple business entities (LLCs, corporations, limited or general partnerships) but one person with a variety of income producing activities all under the same roof, with overlapping expenses, I don't think so and I don't think the IRS is going to nitpick combining all the activities on to a single Schedule C with proper documentation so the math comes out the same either way at audit.

    Quote:

    Quoting badzombie
    View Post
    Without knowing how much income the writing generates I would not call it incidental. It could be bringing in a lot of money for all any of us know.

    Then call the business writing and consider the teaching incidental. My comment wasn't meant to be as rigid as your interpretation of my comment.
  • 02-22-2015, 12:48 AM
    Taxing Matters
    Re: Do I Report Multiple Business Ventures on Schedule C
    Quote:

    Quoting adjusterjack
    View Post
    It's one thing if you have created multiple business entities (LLCs, corporations, limited or general partnerships) but one person with a variety of income producing activities all under the same roof, with overlapping expenses, I don't think so and I don't think the IRS is going to nitpick combining all the activities on to a single Schedule C with proper documentation so the math comes out the same either way at audit.

    Properly done, distinctly different business activities of a sole proprietor should be reported on separate Schedules C. For example, a person who is a sole proprietor architect and a fiction novelist would do two separate Schedules C, one for the architecture business and one for the writing venture. If you don't do that, you can indeed run into problems. Among them is an increased risk of audit. The Schedule C asks for an industry code for the business. The IRS then compares the numbers on the Schedule C with other businesses of that type to determine if the income and expenses are statistically different enough from other businesses of that same type to warrant an audit. If you combine several distinctly different types of business on one Schedule C, you still only put down one industry code for it, but now the income and expense are more likely to vary enough statistically that an audit may be more likely. There can be other difficulties in combining several different activities, too. For example, if one line of business is subject to passive activity loss rules and the other is not, combining them amy lead you to incorrect tax results.
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